Where is the stock market?
Most of us know a market when we see one – a local farmers market, a flea market, a supermarket or even a shopping mall. The stock market (or the market of stocks) is actually a bit misleading because it suggests there is an actual location, but in truth it is a “public entity” for the transacting of stocks. To use the example above, when people talk about the “housing market” they are not talking about a great big place where people bring homes to sell – instead it describes the overall trading activity of a particular product (in this case houses).
The stock market is a marketplace for equities and describes the overall buying and selling activity of stocks. “But what about Wall Street and all those pictures we see on the news of screaming traders?” you might be wondering – well the places where stocks actually get exchanged are called…wait for it…stock exchanges.
Before the world of supercomputers and the internet, people figured out it would be a good idea to create a centralized place where they could easily trade stocks with one another – the one stop shop. Without going into the history of stock exchanges , it’s mainly important to know that exchanges act as the “place” (just like a mall) where stocks can be transacted. This great little video (even though it’s old) captures how things work.
Some of the major American exchanges are the New York Stock Exchange, the American Stock Exchange and the NASDAQ (which stands for the National Association of Securities Dealers Automated Quotation – and is very tricky to fit on a business card). In Canada, the major exchanges for stocks are the Canadian Securities Exchange, Toronto Stock Exchange (formerly known as the TSE now as the TSX) and the TSX Venture Exchange. For a handy list of major world stock exchanges you can click here.
In order to participate in the buying/selling of stocks i.e. to participate in the stock market, you will have to go through a broker or intermediary of some type. If you are the do-it-yourself kind, you’ll probably go through a discount broker that will be the gateway to you connecting to the markets. We have a great section that goes through the different discount brokerages available to Canadians here.
Asking if you can participate, however, is a very different question than asking if you should and a good financial planner can help you think through the answers to both.